Are We Overpaying Grandpa?By CASEY B. MULLIGAN Casey B. Mulligan is an economics professor at the University of Chicago. February 24, 2010, 6:00 am

The elderly receive a large amount of government assistance  an amount that is not commensurate with their numbers.

The total annual income in the United States (national income, as economists call it) is about $12.5 trillion, or about $40,000 per person per year. The egalitarian view of government is that it taxes persons with annual incomes more than $40,000, and pays benefits to persons with less than $40,000, so that those with less than average incomes could enjoy living standards closer to the average.

For reasons that I began to explain last week, our government actually does the opposite. The vast bulk of government spending goes to the elderly, whose average living standards are significantly above $40,000 per year.

Social Security, Medicare and government employee retirement (federal, state and local) are government funds paid to people aged 62 and over (aged 65 and over, in the case of Medicare), and total about $1.5 trillion in the current fiscal year. Annual Medicare spending is $12,000 per person aged 65 and over, and growing. Annual Social Security and government employee retirement payments are $21,000 per person aged 62 and over.

RUSH: By the way, if you are elderly, I have a piece here, it's a New York Times blog. They are coming for you in another way, not just health care, but the headline of this blog is: "Are We Overpaying Grandpa?" Democrat hypocrisy is funny and it's serious, but it's common.

"Are We Overpaying Grandpa?" The war on the elderly continues. (buzzer) Republicans, they're no different than the Democrats! They're just worthless! "The elderly receive a large amount of government assistance -- an amount that is not commensurate with their numbers. The total annual income in the United States (national income, as economists call it) is about $12.5 trillion, or about $40,000 per person per year. The egalitarian view of government is that it taxes persons with annual incomes more than $40,000, and pays benefits to persons with less than $40,000, so that those with less than average incomes could enjoy living standards closer to the average." That's the theory. "For reasons that I," this is the blogger, "began to explain last week, our government actually does the opposite.

"The vast bulk of government spending goes to the elderly, whose average living standards are significantly above $40,000 per year. Social Security, Medicare and government employee retirement (federal, state and local) are government funds paid to people aged 62 and over (aged 65 and over, in the case of Medicare), and total about $1.5 trillion in the current fiscal year. Annual Medicare spending is $12,000 per person aged 65 and over, and growing. Annual Social Security and government employee retirement payments are $21,000 per person aged 62 and over. Medicaid, hospital and other public health programs are open to persons of all ages, although those programs spend more per participant on the elderly than on the others."

The blogger says, "I estimate that, on average, these health programs are annually spending $7,000 per American aged 65 and over. Combined, the public pension and public health programs are spending an average of $40,000 per elderly American per year. Thus, even if elderly Americans could rely on no other income source, on average they could have living standards of $40,000 per year. Moreover, many of the elderly have significant private incomes and wealth in their homes, which means that elderly average living standards actually far exceed $40,000 and thereby exceed the living standards of the average American. How is it possible that so much government spending goes to persons with above average living standards? This is one of the great puzzles in economics and political science."

It's not a puzzle! The blogger at the New York Times can't figure this out? It's 'cause they are the ones who vote in record numbers. The elderly, to keep the gravy train flowing, they show up and they vote. Every four years we worry about the youth vote, and, "Why isn't the yute vote voting!" because they're not being paid to vote yet. So, once again, the New York Times is beating the drum for cutting Social Security and Medicare, Medicaid benefits for the elderly. This is what they're doing. Why else write this? So now we got Obama's health care, which does have deathly panels in it -- we know full well that your age, your medical condition, how many years you have left according to actuarial charts -- will determine whether or not you get government-mandated health coverage.

Isn't it funny, my friends, how during election years the media and the rest of the Democrats always accuse the Republicans of wanting to do exactly what the New York Times is suggesting here. (buzzer) Republicans suck! Every four years, we're told that the Republicans want to cut Social Security, take the elder's houses away from them. We are told every four years that the Republicans basically want to feed dog food to the elderly, and as a bonus they'll buy 'em new can openers so they don't cut their fingers are manual can openers trying to eat. Yet here's the New York Times, the Obama gospel, advocating just that. (buzzer) There's no difference in the Democrats and the Republicans. They're both worthless, and that's why we've got Obama.

We all know BO wants to give granny a pain pill and let her die, so this is hardly unexpected. Surely a trial balloon from the BO administration. Another sinister detail: the author is an economics professor at the University of Chicago.

My 95 year old mother’s Idea of a great time is going to the doctor. I think she alone has bankrupted SS and medicare. It’s amazing!! She keeps thinking she is sick. I told my wife we will put on her stone “ told you I was sick” !! Thank you FDR!!

5
posted on 02/24/2010 8:52:08 PM PST
by Empireoftheatom48
(Zero will never be my President, never!!!!!)

Government assistance is a bestowed stipend, which may or may not be related to some service performed in the past, as opposed to an EARNED pension, in which a certain amount is set aside and invested in a paying enterprise, and allowed to make use of the magic of compound interest.

Social Security has NEVER been allowed to be used as a personal pension fund, and also, it has never been held to account. The payment is treated as an entitlement, not an earned and just reward. Originally, the pool of entitled persons who would actually live to receive some portion of the fund was quite small, but over time the pool just kept getting bigger, while the contributions grew more slowly.

Capitalism works. But only if you allow it to be practiced.

Government assistance is about as far as anybody could get from the practice of capitalism.

7
posted on 02/24/2010 8:53:21 PM PST
by alloysteel
(....the Kennedys can be regarded as dysfunctional. Even in death.)

The amazing thing about the article is that it makes no attempt to show whether the benefits are justified based on the contributions those elderly mad.

You don’t qualify for SS benefits unless you’d contributed for 40qtrs, and your benefit is based on the highest 20qtrs. So the dirty little secret is not that the SS benefits are too high, but that the high-contributors are getting ripped off while the low-contributors are getting much more than they ever contributed.

So this bozo complains that those elderly who have other sources of income and assets are being “overpaid”, yet those are likely the same people that paid high taxes into the system and are getting screwed already relative to what they paid.

I’ve often wondered if the SS/M fund would be solvent if the benefits were calculated as though the taxes collected had been contributions to annuity funds and the annuity earned whatever interest rate the Treasury paid when it borrowed the money from it.

Had it been done that way initially, I think we’d still be screwed as lifespans exceeded what was expected, but I don’t think its debt would be the nightmare it is now.

I argued with my friend about Obama being a disaster for our economy and security. He kept trying to assure me that Obama was a middle of the road candidate who would be kept in the middle by other politicians. My friend now realizes his mistake but it's too bad the HVAC business he owns is ready to go under. He's been struggling ever since Obama got elected.

The egalitarian view of government is that it taxes persons with annual incomes more than $40,000, and pays benefits to persons with less than $40,000, so that those with less than average incomes could enjoy living standards closer to the average.

Egalitarian? Uh, no, that is the "redistributive" or "socialist" point of view.

This is really fantastically silly. The reason old people get a "disproportionate" share of benefits is that (1) they enjoy retirement benefits, being, well, old, and those who aren't, don't, and (2) they enjoy medical benefits in proportion to medical problems, of which they have a higher instance than other age demographics. This isn't difficult. One will find that very young people enjoy the same dubious privilege, being too young to contribute to the system but not too young to pull from it. Anyone who professes surprise at this probably hasn't thought it through.

A relative has a friend in WA state. He had a great business and foolishly voted for Obama. He does not love him now and his business is about to go under. Hard lessons for naive people.

What I saw after he won - is any people with money stopped spending. Mid sized business owners just started cutting the day after the election. Just liked you saw with your friend’s business. People fear him, have no confidence and every day they expect things will get worse (and they are).

I’ve heard that about immigrants that were granted refugee status, but I don’t know what the terms are in general. Without any records of contributions and earnings, I would hope their benefit amount is the minimum. Of course that would still be an infinite rate of return on their zero contribution.

My paternal grandmother lived to be 90. She lived with my aunt (who was widowed) Aunt Zella called one day and told my mother she wanted everyone to chip in to give grandma a party as she was going to be 75 and she could die any time....

Mom got off the phone and told my father what his sister said about grandma could die at any time...I will never forget my fathers answer and laugh about it. "You couldn't kill that old woman with a baseball bat" Grandma lived another 15 years...He was born in 1901, grew up on a farm in Michigan and knew his mother was a tough old bird...

Social Security has NEVER been allowed to be used as a personal pension fund, and also, it has never been held to account. The payment is treated as an entitlement, not an earned and just reward.

Social Security is actually earned, and is based on how much money you paid in. Sure, at first people got more than they paid in, and in simple dollars it is still true, but for people retiring today, SS recipients as a whole are not getting out any more than they put in. Medicare is theoretically the same way, but it never took enough in so they fund it with general revenues as well. Retirement is earned as well. So in all, while the elderly get money from the government, most of it isn't "handouts", it is paid for with years of service, or with years of taxes.

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